Issue link: https://jocdigital.uberflip.com/i/447890
FORWARDERS GEAR UP FOR SURGE AHEAD OF CHINESE NEW YEAR ASIA FORWARDERS ARE preparing for a busy first quarter, with a six-week sweet spot between the end of the year in the West and a later-than-usual Chinese New Year expected to drive up cargo volumes being shipped out before the mainland's most important holiday. Chinese factories typi- cally shut down for three weeks for the Lunar New Year holiday, which falls on Feb. 19 this year, prompting U.S. and European shippers to race the clock on goods that need to be on store shelves in time for spring sales. Chad Taylor, regional vice president at Crane Worldwide Logistics Asia Pacific, said he expects the win- ter peak period to be sharper than usual because shipments will be condensed into a shorter Feb- ruary and March. "The actual Chinese New Year holidays only last the weekend but the factories are closed for almost three weeks afterwards, and that puts you into the last month of the quar- ter," he told The Journal of Commerce. "March is usually a big month, but the workers won't be back for a week into it. That means there will be a shorter time period when shippers will try to move a greater quantity of goods, and four weeks of shipping will be squeezed into three." David Goldberg, DHL's senior vice president of Asia Pacific ocean freight and acting country manager for Singapore, said the integrator was forecast- ing a typical pre-Chinese New Year period where factories try to push out as much cargo as they can before closing for the holiday. He said the tight ocean space may support container lines' attempts to impose general rate increases from mid-January through mid-February, but the higher prices would unlikely last for long. OPTIMISM SOARS AMONG US SHIPPERS FROM PORT CONGESTION to difficulties finding long-haul truck drivers, there are plenty of things to keep shippers up at night. Despite all of it, U.S. shippers are more optimistic about freight growth than they've been in nearly three years, according to a recent survey. The roughly 600 shippers surveyed by Wolfe Research late last year are planning for same-store shipments to rise 3.5 percent on average during the next 12 months. Shippers expect far more freight growth than the 2.8 percent gains they anticipated when they were surveyed three months earlier, and the 3.2 percent expansion they expected a year ago, according to Wolfe Research. Despite their expectations to move more cargo, shippers pulled back on how much they think transportation costs will rise, largely because of lower fuel prices. Surveyed shippers — whose total annual transportation budgets exceed $10 billion — said they expect costs to rise 3.3 percent, a deceleration from the 4.2 percent cost increase they expected in the fourth quar- ter of 2014. But when fuel is excluded, shippers expect to spend more, with their latest forecast at 3.8 percent, compared to their projections made last quarter that transportation costs would increase 3.7 percent. "This is the highest level we've seen in our survey in three years," said Wolfe Research, a New York-based investment research firm. "We believe this reflects accelerating volume and pricing expectations across almost all freight modes, offset by lower fuel." Slightly more than half of the surveyed shippers expect lower fuel prices will spur transportation providers to raise rates this year. Shippers expect the sharpest volume increases to come from rail carload transport and truckload, with traffic in both sectors forecast to rise 3 percent. Shippers forecast cargo hauled by domestic ground services, container lines and intermodal trains to rise 2 to 3 percent, according to the survey. Shippers say the sharpest price increases among domestic modes will be in rail carload transport. Rail carload pricing is expected to rise on average 3.7 percent, the healthiest pace in three years, according to the survey. Spotlight 6 THE JOURNAL OF COMMERCE www.joc.com JANUARY 26.2015 6 THE JOURNAL OF COMMERCE www.joc.com "There will be a shorter time period when shippers will try to move a greater quantity of goods." "This is the highest level (of expectations for increasing costs) we've seen in three years."